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World Business

News/Business. (2010) (CC) (Stereo)












Toyota 20, Wensleydale 12, Wallace 7, London 7, China 6, Japan 4, Us 4, Uk 4, Grommit 3, Hartley 3, Los Angeles 2, Marshall Tuck 2, United States 2, England 2, America 2, La 2, Dairy Crest 2, Green Dot 2, David Hartley 1, Haynes 1,
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  WHUT    World Business    News/Business.   
   (2010)  (CC) (Stereo)  

    April 4, 2010
    10:00 - 10:30am EDT  

>>abirached: this week on world business... >>toyota lost its worldwide reputation for reliability after this year's humiliating recalls. so canthe company recover and if so how? >>sales are down, the brand perception is down . . . they are already worried about how their image will be impacted in china. >>a new take on teaching - the education entrepreneurs shaking up the school system in the us >>things that the old system perhaps took for granted and didn't challenge the new entrepreneurs arestarting to challenge. >>and how one man and his dog changed the fortunes of a tiny cheese factory in northern england >>grommit, that's it, cheese.
>>abirached: hello and welcome. i'm raya abirached and this is world business, your weekly insight into the global business trends shaping our lives. so far 2010 has been a disastrous year for toyota,with mechanical and electronic faults plaguing its vehicles, including steering problems, sticky gas pedals, suspect brakes and runaway electronic throttles. so what went wrong with this flagship japanese company and can toyota recover? >>reporter: toyota's recalls have seriously knocked the company back in overseas markets. in the us, demand for models affected by the recall dropped 28 percent in january, and the following month even other models made by the firm were down 16 percent.
>>but back home keiji mukai remains unshaken by the scare stories. >>mukai: i don't feel scared at all, and i've never had any dangerous incidents. i think in americathey may speed too much. >>reporter: the situation abroad may even be overplayed. veteran car marketer mick lay, who deals directly with many foreign buyers, is hearing no criticisms. >>lay: i talk to customers every day regarding buying cars. obviously toyota comes up. in all honesty, no one has actually asked me any questions about it. it's only been the people who have priuses at the moment that have asked to double-check on the recall issue. >>reporter: toyota ceo akio toyoda and other execs publicly admit, however, that the vaunted toyotaway-with dedicated mentors instilling a cult of quality in new employees -has indeed broken down. >>ironically, industry analysts see toyota's hyper-accelerated growth as a root cause of
its waywardquality standards. >>greimel: over the last decade, toyota went through some massive expansions, in japan and especially overseas, and that put a lot of pressure on the company for a variety of reasons. they had to expand into countries where they typically didn't have a lot of experience. they'd had to work with newsuppliers who didn't have a deeper appreciation of the toyota way. they'd have to send in experienced production engineers to go set up the factory, and it stretched the ranks thin of these kind of specialists. >>jackson: toyota staggered badly in its initial responses to the recall crisis, denying that the problems even existed. government and consumer pressure in the uk, japan and the u.s. forced the issue. ceo toyoda later made a world apology tour of key markets, including china. >>reporter: but toyota has recently become more assertive, responding with its own experts after anautomotive analyst from southern illinois
university claimed to have discovered electronic faults that his toyota test car's onboard computer couldn't recognize. >>the long-term implications for toyota's brand and image worldwide-and how the automaker's wrong-way jaunt will affect japan's export machine-could be disastrous. >>langley: toyota's probably the best company in japan, and by definition that means it is probablyone of the best companies in the world. the problem with toyota is that it's a huge structure, and any significant damage to the revenue stream could tend to topple this inverted pyramid, because it's just grown so massively (in) production. >>reporter: toyota will have a hard haul yanking its reputation back up, especially in countries with strong consumer movements. >>greimel: unfortunately for toyota, it's hurting their image in some of their most important markets, that is the united states and china. sales are down, the brand perception is
down . . . they arealready worried about how their image will be impacted in china. >>reporter: fortunately for the automaker, quality expectations are still low in other ripe new markets like india and thailand, where consumer protection is a virtually unknown concept. >>the real loser in all this could be japan inc. being overtaken by china as the second-largest economy in the world seriously dented national pride-a blow the country will take time to recover from. >>meanwhile, market observers say the jury's out on toyota's immediate overall health. the firm has already forfeited an estimated two billion dollars to the global safety recall. even worse, a massive u.s.-based class-action suit is now in the works. >>langley: class actions are tough. damages - triple damages - discovery, all these things make doing business in the states, not just
for foreigners, for americans, too, very difficult. a class-action suit that could, you know, certainly run into the tens of billions of dollars in an issue like this where people are dying. >>reporter: which, if proved to be toyota's fault, would be tragic as well as disastrous. a situation where people may have lost their lives due to company error and the knock on effect in terms of trust, would prove far costlier than even toyota could imagine. >>abirached: the problems faced by toyota have of course raised another, perhaps even bigger issue. more and more functions in cars and planes are now controlled entirely electronically; if these are shown to be fallible, the damage done to consumer confidence in the entire transport industry could be massive. >>these days the word 'entrepreneur usually conjures up images of tech start ups
and small businesses. however in the usa, a new type of entrepreneur has arisen over the past decade whose goal is to transform an ailing education system. >>reporter: it's the same story all over the united states. failing schools are abandoning too manychildren to a life of poverty. >>mitchell: in urban school districts across america fewer than 50% of the 14-year olds who enter high school, graduate. that's a recipe for a permanent underclass. >>reporter: 1.2 million students drop out of high school each year. and it's not just their loss. these dropouts cost the long term economy in lost wages, taxes from the class of 2007 are predicted to total losses of more than $300 billion dollars over the course of their working lives.
>> tuck: we're not prioritizing education the way we need to particularly for poor people in this country. i was down in watts yesterday, it's a part of los angeles, walked into a classroom where we're telling these young people that education's their future and they had no computers in the classroom and this is supposed to be our future, this is the hope. >>reporter: but in the past decade a new breed of innovators has emerged in the fight against declining standards, so called "education entrepreneurs". >>stecher: the new educational entrepreneurs offer an opportunity to really revitalize the system and bring in different kinds of ideas. things that the old system perhaps took for granted and didn'tchallenge the new entrepreneurs are starting to challenge. >>reporter: animo venice high school in los angeles is an example of these new ideas. located in a poor area where dismal academic results are the norm, it's run not by the la school district but by non profit firm green dot public schools. its students have just moved
into a brand new building paid for by private funding. >>harrison: almost all the students here come from a low income background. about three quarters ofthem get free or reduced meals and they arrive here seriously behind in their subjects. but last year, the first graduating class of 2008, 80% went on to do a 4-year university degree. >>petruzzi: we try to create a different culture from year one, a culture that is a college going culture, a culture of high expectations for everyone but also a safer culture where the students haveconnections with adults and they are in a smaller environment and they have adults that believe in them and that's important. >>reporter: green dot is in charge of 8000 students in 20 schools around la. the schools are publicly funded but they receive less money than traditional schools. in exchange, the school district gives them more flexibility in how they operate. the organization normally seeks private money to build new schools
and recently received funding for teacher effectiveness programs from the bill & melinda gates foundation. along with teacher training, green dot uses read 180, a technology driven intervention program designed for struggling readers as they enter high school. as for numbers, following a suggestion from its teachers, green dot integrated math into every subject taught at its schools. one of the other funding sources for the la non-profit is new schools venture fund. created in part by silicon valley venture capitalists, this non-profit fund has invested $150 million in 30 organizations over the past ten years. >>mitchell: we look at a lot of business plans and many of them are elegant structural plans for how to do this differently and how to do that differently and some of those are good ideas. but none of them will work unless the team at the top has a complete commitment to the lives of individual kids and their families. that becomes a big screen for us. >>reporter: and not all
education entrepreneurs are working outside the bureaucracy of the urban school districts. >> tuck: working within the school district can be really hard and frankly that's why most people don't do it but guess what? 90% of the kids in this country work in the school system so we have to find a way to do it. >>reporter: marshall tuck has a harvard mba but rather than take a high paying job he's chosen to lead a non profit organization that takes the lowest performing schools in the la school district andtries to turn them around. >> tuck: the best experience for me coming into this job, my mba was great, but frankly i worked ata entrepreneurial start up before going into education, which was great because learning the skillsof how to go after big monopolies or big competitors, how to build a new organization in a sector that you're trying to change has been essential. >>reporter: marshall tuck's transition from the private to the public sector was assisted by billionaire eli broad, or more accurately by the broad residency in urban education, a management development program for talented early
career executives. >>the broad foundation also trains experienced business leaders to become school district superintendents, a job which in urban areas has been compared to running a fortune 500 company. >>broad: we found people running school districts that really didn't have any training whatsoever in managing anything but they started as a coach or a teacher and 30 years later because they had a great personality and political skills they were in effect the chief executive of a large organization so we said 'let's see if we can start training people that can do better than those that are currently in jobs like that'. >>reporter: so far the foundation has filled over 60 superintendent positions. but despite the progress, education entrepreneurs have their work cut out for them. >> tuck: if you took ibm 40 years ago and tried to make it competitive today, that company has completely transformed and turned over 2 or 3 times since then. and that's essentially what
you're trying to do in education. the sector has not changed dramatically over the last 40 years and yet the challenges of educating our young people have intensified greatly. >>for many education entrepreneurs, there's hope that increased private funding plus a supportive obama administration will add up to a brighter future for underprivileged children across america. >>abirached: still to come on world business... >>how a crackpot inventor and his dog reanimated an ailing cheese maker. >>and the small businesses going for gold in the run up to the 2012 olympics. >>some winning contracts....and the rest in just a moment on world business... >>abirached: 15 years ago wensleydale cheese was known only to a few aficionados
in the north of england. but then a small clay man and his dog expressed their love for the product and overnight popularity and profits soared... >>reporter: wensleydale! a favourite of wallace and gromit and the great british public for more than 100 years. made here, in the northern british town of wensleydale since the 1890's, its creameryhas never stopped production. well nearly... >>hartley: what happened in 1992 was that after a rationalization done by dairy crest, they decidedto close the creamery here at haws... >>reporter: which was bad news because 59 people employed here were made redundant and the creamerywas to be moved away from this countryside town to yorkshire's traditional rival... lancashire! >>hartley: although the 59 were made redundant , my self
and 4 other colleagues came together to buy the creamery from dairy crest. and it was actually november 1992 that we succeeded in that missionand we took over this site here. and basically we started off with a very small workforce. >>reporter: and thus the wensleydale creamery at haws was reformed. >>hartley: and by 1992-1993 which was our first year of trading we had a turnover of 2.8 million pounds. >>reporter: ...a little over 4 and a half million dollars. today the creamery employs 200 full timestaff, has a healthy order book and even a visitor centre attracting hundreds of thousands of tourists. >>andrew: it very much tends to draw the public to our visitor centre which you can see behind me and we get 250,000 visitors every year and there is an opportunity for them to sample and try wensleydale cheese. >>reporter: and the reason for this almost bizarre level of interest - a little clay man and his doting
started back in 1996, when david hartley received a cryptic card from a then not so well known animation studio based in bristol. >>hartley: we got a card from the father of one of the directors of aardman animations saying that we should watch the particular wallace and grommit film that was being released: the close shave. christmas of 1996... and that we should watch and we will see something of interest to us. we didn't really know what it meant until the final scene, where wallace is trying to woo his lady friend, gwondolene into his house and he says: would you like to come in? we are just about to have some cheese;and these immortal words: audio: (oh no not cheese, sorry, it brings me out in a rush, can't standthat stuff). and he says: audio: (not even wensleydale?).
>>reporter: and with that this little known cheese was introduced to the world, now the profits speak for themselves.... >>hartley: this year our turnover should be in excess of 21 million pounds. >>reporter: that's 35 million dollars, not bad for a little factory in the north of england. the studio and the factory have also teamed up to produce a specially branded wallace and gromitt cheese.after all it seems that the wensleydale and wallace are a match made in heaven, especially with thepublic. >>reporter: do you know what is wallace and grommit's favourite food? >>person: cheese/ wensleydale >>person: cheese... wensleydale >>person: wensleydale >>person: wensleydale >>reporter: well, not everyone: >>person: cheddar cheese? mozzarella? >>reporter: the success story does not end here. in early 2009 they signed an exclusive 1.7 milliondollar deal with us based anco fine cheese, the largest importer of specialist cheese to the us andcanada.
>>andrew: the anco deal in north america and canada is very much new grounds for us and we would like to built on that. we are always looking for emerging markets, we understand that certainly far east, china have a huge population and their dairy consumption is rising exponentially so we would like to rely ourselves with those customers and be first into those markets. >>reporter: their forecast plan is to grow the company to around 45 million dollars within the next5 to 10 years. >>hartley: i just want to built a successful company here in wensleydale where the suppliers, the farmers want to be associated with this business and do want this to succeed because they do like this feeling of localness which gives them a feeling of security. >>reporter: a feeling of security that could be strengthened even further if the eu awards the wensleydale creamery a protected designation of origin status which would mean that only this region could produce the cheese,
meaning a happy future for cows, cheese makers and fictional inventors alike. >>abirached: and the makers of wallace and grommit only chose wensleydale because the sound of the word makes it interesting to animate. they were completely unaware of its financial difficulties at the time. >>in the wake of the winter olympics, all eyes turn to london 2012. vancouver was dogged by difficulties in the fallout from recession, but how has london been faring and what type of companies have been winning gold in advance of the games? >>reporter: since london won the bid for the 2012 olympics, is not just been british athletes working overtime for domestic success, but british business too.
construction is well underway at the olympic park, with a daily workforce of nearly 10,000 >>haynes: around $8 billion of business has already been won through the 2012 games and 98% of those companies are uk-based businesses, and they are from across the uk >>reporter: it is the olympic delivery authority who are responsible for delivering the olympic park, and so far it's on time, and under budget. >>armitt: our basic budget is about $9 billion and then we have a contingency of another $3 billionon top of that so total is 12 billion of which three is contingency ... we are on target. our current estimate is that we will not require all the $9 billion, that will make a saving of about $1 billion
and we're on time. >>reporter: over 1000 uk businesses have so far won construction contracts to help build the venuesand infrastructure for the games. while many are major construction companies, the trickle-down effect means nearly 70% of these contracts have gone to british smes. >>armitt: every size of company has benefited from companies with turnovers annually of several billion dollars down to companies with turnovers of probably $1 million. we've let 1000 contracts as the oda and those have been what we call the tier 1 contracts, but those tier 1 contracts then lead toten of thousands of tier 2 and tier 3 sub contracts. >>reporter: which is of course crucial for the economy at large. smes account for around half of the uk's work force and total gdp - the backbone of the country's wealth generation. one example is glazing and cladding
specialists prater, who are supplying the cladding to the main stadium. >>unwin: this is the first project that we secured which has a value of around 7 and 1/2 million dollars and subsequent to that we've secured a further three projects which have a combined value of around $25 million >>reporter: that equates to 20% of annual turnover, a podium level contract in any year, never mindin a recession: >>unwin: for us and obviously with the global downturn the importance of the olympic park has obviously become more acute. so the fact that we were able to undertake projects of this size with the financial commitment from the clients is extremely important. >>reporter: although that financial commitment did hang in the balance for a moment,
when private sector finance pulled out of both the olympic village and broadcasting centre. >>armitt: because of the credit crunch they could not provide finance on anything like competitive terms so the decision was made that we would finance the village and the broadcasting centre from public funds and those we found from our contingency and from savings that we'd made elsewhere on the plan. >>reporter: however, the recession has also had some unexpected benefits: >>armitt: competition has been a lot fiercer. labour has been more available and inflation has not been as high so the recession in a way it has benefited us. >>reporter: and recession or not, the olympic start date of 27 july 2012 is not a deadline to miss. >>dollin: it really does concentrate the mind and it's something that every staff member that workson this job is very acutely aware of.
>>reporter: while most of the contracts so far have been in the field of construction, as the deadline approaches there will be more and more diverse business opportunities. >>haynes: as you would imagine so far the focus has been quite highly on the construction site, butthat's going to change very much between now and 2012 and all kinds of companies are going to benefit, from catering, to information services to uniform manufacturers so it's really important for companies to start thinking about it now . >>reporter: and it is as the games themselves approach the benefits are expected to filter out to awhole range of companies. >>alambritis: you've got 10,000 athletes here throughout the olympics, wanting leisure facilities, wanting food, wanting haircuts for example but also more importantly 100,000 visitors a day in london wanting hotel accommodation, wanting those small ticket items, those discretionary spends as it were that can increase the turnover of london's
economy by 10 to 20% >>reporter: and of course modern olympics are not just about building solely for the games, legacy is equally as important: >>armitt: the olympic park legacy company will have a major long-term plan to continue to develop the park, so more housing will go on the park, more commercial buildings will go up on the park, we will have to change some of the infrastructure for legacy as opposed to games use. >>reporter: yet in the light of greece's current financial problems and the famously negative economic fallout from the 1976 montreal olympics, when the city was left with $2.7 billion of debt that it is still paying off, will london's legacy really be beneficial? >>alambritis: we believe that for london it will be positive. the point of course is to keep the momentum after the olympic games have been and gone.
>>reporter: as such, british business will have to be both flexible and athletic if it really wantsto turn olympic endeavour into gold. >>abirached: that's it for this week's world business. thanks for watching. we'll see you again atthe same time next week.